Price, product, promotion and place (4Ps): introduction

The idea

The introduction stage is the first phase of the product life cycle, when a new product is launched into the market. At this point, sales are typically low because customers are unaware of the product, and the business often spends heavily on promotion to build awareness. Profits may be negative because development and launch costs have not yet been recovered. Pricing may be high to skim early adopters or low to penetrate the market quickly. The marketing mix must be coordinated: the product must meet a need, promotion must inform and persuade, place must ensure availability, and price must reflect the strategy. How well the introduction is managed affects whether the product moves into the growth stage.

What earns the marks

• Defines the introduction stage as the launch phase of the product life cycle with low sales and high promotion spending.
• Explains why profits are often negative at introduction, referring to development and launch costs.
• Describes pricing strategies that may be used at introduction, such as price skimming or penetration pricing.
• Explains how promotion is used to build customer awareness during introduction.
• Analyses how the elements of the marketing mix must work together at introduction.
• Evaluates the importance of a successful introduction for the product's future life cycle.

Common mistakes and how to put them right

• Thinking that sales are high at introduction.

  Put it right: Sales are usually low because the product is new and unfamiliar.

• Assuming the product is always profitable at launch.

  Put it right: Costs often exceed revenue, so profits may be negative.

• Ignoring the role of promotion.

  Put it right: Promotion is crucial to create awareness and encourage trial.

Exam tips

• Use the context of the product to explain why sales might be low or high at introduction.
• When discussing pricing, link the chosen strategy to the product's target market and objectives.
• Consider how the introduction stage affects cash flow and the need for adequate finance.